BP, Total, Azerbaijan's Socar To Fund TAP Gas Pipeline Project

Plans for the Trans Adriatic Pipeline project, aimed to carry Caspian natural gas to Italy, received a boost Thursday, as the pipeline consortium said energy giants BP PLC, France's Total SA and Azerbaijan's state oil company Socar have agreed to fund the project.
"The signing of this agreement is a significant vote of confidence in the quality of TAP's technical and commercial solutions from key industry players," Kjetil Tungland, TAP's managing director, said in a statement.
The agreement--which includes an option for the companies to buy up to 50% of TAP-- could give the project a strong advantage over its competitor, the much talked-about Nabucco project, because BP, Total and Socar are three of the main partners in the development of Shah Deniz II, a major gas field offshore Azerbaijan.
Norway's Statoil ASA is another key partner and is already a shareholder in TAP.
Shah Deniz is key for the European Union's strategy of boosting its energy security by easing dependence on Russian imports, because in about six years it is expected to provide the first gas ever from the Caspian to Europe, opening what the EU hopes will be a gas "corridor" from one of the most resource rich regions in the world.
TAP and a scaled-down version of the original Nabucco project, called Nabucco West, are the two proposals left in the competition to open up that corridor and a choice between the two is expected next year. While TAP would carry the gas across Greece and Albania to Italy, Nabucco West plans to take it to Austria, across central Europe.
Thursday's announcement, combined with recent remarks by BP's head for Shah Deniz, suggest that the consortium might prefer TAP. However, the company, which plays a pivotal role in Shah Deniz, has generally stressed that it remains committed to the selection process that could ultimately see Nabucco West prevail.
Shah Deniz II is expected to add roughly 16 billion cubic meters of annual production, 10 billion cubic meters of which would be ready for export to the E.U.
BP and Statoil both own 25.5% stakes of Shah Deniz. Socar, Russia's OAO Lukoil Holdings (LKOH.RS, LUKOY), Total and National Iranian Oil Co. all own 10% each, while Turkish Petroleum Corp., or TPAO, owns 9%.
Source: Dow Jones